During the month of Nov '17, FIIs were net sellers of equity worth Rs 135.1 Billion. It was their fourth straight month of net selling. DIIs were net buyers of equity worth Rs 92.4 Billion, as per provisional figures.
On a monthly closing basis, Sensex lost 64 points (0.2%) and Nifty lost 108 points (1%). On Fri. Dec 1, when both indices fell sharply, FIIs were net buyers of equity worth Rs 3.1 Billion. DIIs were also net buyers of equity worth Rs 1.8 Billion.
There was some good news on the macroeconomic front. India's Q2 (Jul-Sep '17) GDP grew 6.3%, against 5.7% in Q1 (Apr-Jun '17) but much lower than 7.5% in Q2 (Jul-Sep '16).
Nikkei India's Manufacturing PMI was 52.6 in Nov '17, against 50.3 in Oct '17 and 52.3 in Nov '16. (A number >50 indicates growth). Auto sales of top 7 manufacturers grew 16% in Nov '17 .
BSE Sensex index chart pattern
The following comments in last week's post on the daily bar chart pattern of Sensex should have sounded a warning bell to those holding long positions: "Expect bears to make a last-ditch stand to prevent bulls from regaining complete control...Index valuation is increasingly looking stretched."
Formation of a small 'reversal day' bar (higher high, lower close) on Tue. Nov 28 triggered profit booking that dropped the index to a close below its 50 day EMA for the first time after 8 weeks.
Daily technical indicators are looking bearish and showing downward momentum. MACD is falling below its signal line in bullish zone. ROC has fallen sharply below its 10 day MA into bearish zone. RSI and Slow stochastic have dropped below their 50% levels inside bearish zones.
Some more correction is possible. But bears should not get too enthusiastic. The index is close to the upper edge of the downward-sloping channel, which had provided good support on Nov 15 - and may do so again.
The fact that FIIs and DIIs were both net buyers on Fri. Dec 1 is another sign that the correction may be coming to an end.
FIIs may resume selling on any technical bounce due to calendar year-end considerations. Sensex may consolidate - till Gujarat state election results are announced on Dec 18th - before resuming its rally.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty plummeted to seek support from the 10100 level on profit booking caused by concerns about India's widening trade deficit. The 20 week EMA is just below the 10100 level, and should provide additional support.
Weekly technical indicators have corrected overbought conditions, and are showing downward momentum in bullish zones.
Some more correction can't be ruled out. But proximity to the 'support/resistance zone' between 10100 and 9700 should stall a deeper correction.
Nifty's TTM P/E has slipped to 25.90, but remains well above its long-term average. The breadth indicator NSE TRIN (not shown) has risen rapidly towards its oversold zone and can limit index downside.
Bottomline? Sensex and Nifty charts have corrected down to test important support levels that were successfully tested two weeks back. Some more correction is possible. But don't expect a deep correction.
On a monthly closing basis, Sensex lost 64 points (0.2%) and Nifty lost 108 points (1%). On Fri. Dec 1, when both indices fell sharply, FIIs were net buyers of equity worth Rs 3.1 Billion. DIIs were also net buyers of equity worth Rs 1.8 Billion.
There was some good news on the macroeconomic front. India's Q2 (Jul-Sep '17) GDP grew 6.3%, against 5.7% in Q1 (Apr-Jun '17) but much lower than 7.5% in Q2 (Jul-Sep '16).
Nikkei India's Manufacturing PMI was 52.6 in Nov '17, against 50.3 in Oct '17 and 52.3 in Nov '16. (A number >50 indicates growth). Auto sales of top 7 manufacturers grew 16% in Nov '17 .
BSE Sensex index chart pattern
The following comments in last week's post on the daily bar chart pattern of Sensex should have sounded a warning bell to those holding long positions: "Expect bears to make a last-ditch stand to prevent bulls from regaining complete control...Index valuation is increasingly looking stretched."
Formation of a small 'reversal day' bar (higher high, lower close) on Tue. Nov 28 triggered profit booking that dropped the index to a close below its 50 day EMA for the first time after 8 weeks.
Daily technical indicators are looking bearish and showing downward momentum. MACD is falling below its signal line in bullish zone. ROC has fallen sharply below its 10 day MA into bearish zone. RSI and Slow stochastic have dropped below their 50% levels inside bearish zones.
Some more correction is possible. But bears should not get too enthusiastic. The index is close to the upper edge of the downward-sloping channel, which had provided good support on Nov 15 - and may do so again.
The fact that FIIs and DIIs were both net buyers on Fri. Dec 1 is another sign that the correction may be coming to an end.
FIIs may resume selling on any technical bounce due to calendar year-end considerations. Sensex may consolidate - till Gujarat state election results are announced on Dec 18th - before resuming its rally.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty plummeted to seek support from the 10100 level on profit booking caused by concerns about India's widening trade deficit. The 20 week EMA is just below the 10100 level, and should provide additional support.
Weekly technical indicators have corrected overbought conditions, and are showing downward momentum in bullish zones.
Some more correction can't be ruled out. But proximity to the 'support/resistance zone' between 10100 and 9700 should stall a deeper correction.
Nifty's TTM P/E has slipped to 25.90, but remains well above its long-term average. The breadth indicator NSE TRIN (not shown) has risen rapidly towards its oversold zone and can limit index downside.
Bottomline? Sensex and Nifty charts have corrected down to test important support levels that were successfully tested two weeks back. Some more correction is possible. But don't expect a deep correction.
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